Legend Advance Funding Filed Suit Against Your Business: What to Do Before You Respond

If Legend Advance Funding has sued your business, you must respond as the court requires and by the deadline that the court sets. That is different for each court, and sometimes very short. Phone calls or talks with Legend do not affect the legal deadline. Get an MCA attorney on your case now, before the deadline.

Some disputes must be fought out; the claim is too unfair or the money cannot be raised even over time. If you already got sued and didn’t answer, a default judgment may have been entered, and there are things you can do to try to undo it. Whatever the status, the contract and your evidence decide.

The Deadline Depends on How You Were Served

Look at the papers! Look at every paper the process server gave you and read the court’s name. If it says the United States District Court, Northern District of New York, your lawsuit has different rules from a lawsuit in New York State Supreme Court. Legend has filed cases also in Florida (Broward County), so Florida small businesses are at risk. For Broward County, it is usually twenty calendar days from service.

In federal court, you have 21 days from the date of service to appear or the Court can enter a judgment against you. A lawyer must sign an answer or responsive pleading for a corporation.

| Court and service method | Days to respond | Clock starts | What counts as a response | | New York state court, summons handed to you personally inside New York | 20 days | When the summons is handed over | Answer, notice of appearance, or a motion that extends the time to answer, filed through a lawyer | | New York state court, summons left with someone else or served by nail-and-mail | 30 days | When service is complete | Answer, notice of appearance, or a motion that extends the time to answer, filed through a lawyer | | Federal court | 21 days | When the business is served | Answer or motion to dismiss |

Absent a response, one of Legend’s lawyers will go to court to ask for a default judgment against you.

Merely being in another state does not win your case. The real question at the beginning is, has the court got power (jurisdiction) over the person being sued? A defense lawyer looks carefully at how the contract let Legend sue you there and how you were served. On that will stand whether you need to file, change venue, or defend the case there.

The next important thing is to find every piece of paper you received: the summons, the complaint, the envelopes it came in, and anything you did not read very well. Find the contract with Legend, and any assignment you signed. Find a printout of your payment history (i.e., every one of those debit transactions). Pull the bank statements that show what was coming out of your account. Pull any notices about ‘past due’ or ‘dishonor’. Write down what you remember of how these documents came to you, and if you remember the process server. A lawyer needs to see this to make a first assessment of where you are and where you need to go.

Confession of Judgment

Many agreements contain a confession of judgment. The creditor’s lawyer can come to court, and ask the court to enter that as a judgment. A confession of judgment must be filed with the New York county clerk, in the county where the person who signed it lives or is ‘domiciled’. (If you are in business, it gets filed where your company has an office or a business.) C. P. L. R. 3218 sets it out. If your domicile is outside of New York, and your business is located outside of New York, then you are not a resident or a ‘domiciliary’ and the creditor cannot file it in New York. Creditors have 3 years to file a NY confession of judgment, counted from the day it was signed.

If a judgment is already entered against you, you can still take action. CPLR 5015 tells how. Judgment is no automatic win for a creditor. Excusable default and lack of jurisdiction are grounds for vacating default, but you have to make the right motion, to the right court, and at the right time. It is worth trying to ‘blow it up’ (lawyer talk for vacate) as soon as you know it exists.

For an excusable default: You have one year to serve a motion after you have been served with a copy of the judgment and written notice of its entry. Creditors are supposed to give written notice that a judgment was entered in the case.

In some cases the debtor receives no notice at all. There is a court case that says that the one-year clock starts to run only when you get actual written notice that the judgment was entered, not just the papers where the creditor asks for default (Marquez v GSB Supply, 2025). The creditor could not prove it had served a notice of entry, a requirement of New York law. Even if the year expired on the excusable default motion, you still can argue fraud or that the court had no power to enter judgment in the first place.

A CPLR 317 motion asks the court to give you more time to respond. It is open if you were served by a method other than personal delivery and did not get personal notice of the summons in time to defend. CPLR 317 lets you go forward with the motion up to one year after you find out about the judgment, if it has been less than five years since a judgment entered. The debtor must show ‘meritorious defense’ as well.

If a confession of judgment has already been entered, talk to a lawyer about how to remove it. The attorney will have to check carefully what your papers say and where they are filed. A debtor wanting to challenge this needs to file a separate, different notice of motion, with papers from a lawyer, asking the court to vacate the judgment. Attacking a judgment does not guarantee collection stops.

Merchant Cash Advance

Consider the amount you got and reconcile it with what your bank statements show. A lender is not always entitled to whatever the agreement says it is owed. Whether a “merchant cash advance” deal is a loan in disguise turns on these three considerations: is there a reconciliation provision, a finite term, or recourse if the recipient goes bankrupt.

Read the agreement again, and focus on the language where it mentions dropping revenue, defaults, payment on a sale, notice, and adjustments. Compare what the contract says with how those things actually went. The bank statements that show what was being debited are important. The records you sent to support your claim for an adjustment are just as important. The creditor’s answer, its rejection of your claim, counts heavily.

In Florida, a person who lends at over 25% a year commits usury, if he or she also ‘willfully’ charges over 25%. If this happened, then Florida law says the creditor cannot enforce that credit agreement in any Florida court.

If you get named personally, this means you are being pursued as well as the business. Find the personal guarantee you signed, and what caused it to be triggered. Read over the clause that names you personally. Before the business answers the complaint, see if both of you should seek counsel - and maybe different counsel for both the business entity and yourself.

UCC lien filings let the financier, on stopping advance payments, send letters to your customers that instruct them to pay your merchant advance account directly to the financier. You should find the notice right away. Moving money or accounts before you know what is really going on puts you in a weaker position.

If you do not know exactly what kind of legal document is holding the account, find out. Call your bank, or whoever told you your funds got frozen, and ask for a copy of the actual letter you received. A UCC-1, a notice of assignment, a court subpoena, and a court restraint are different.

Often people just assume that part payment or promising a payment plan is an extension of time, but it is not. Agreeing to partial payment, or accepting it, creates a balance due of the rest of the debt, which could be collected aggressively later on.

If you prefer to settle the dispute, get it in writing. A settlement must show the total amount being paid by the debtor, with credit for what Legend has already collected. It has to say the period of payment, and the date. The settlement should mention every business that is covered, every guarantor of those entities, and specify which are released from the settlement. Most important of all, it should say how the court case gets dismissed.

When the finance company offers you a new and lower payment, that is great. However, you still have to check what the company expects to be paid at the end of your new and lower payment plan. Carefully read what happens if a payment or two is missed. Failing one payment could bring the old balance in for collection, and possibly to court. Once all your balances are paid, ask for an official release for each document filed. Do not settle with one player in this business, like Legend, and expect your other obligations go away.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.